World stock markets rose on Monday, with Tokyo hitting the highest level for almost two months as investors hoped that the US economy would start to recover this year after a dire 2008.
Investors took their cue from Wall Street, where shares soared on Friday on expectations that US President-elect Barack Obama’s massive stimulus plan would help to revive the recession-hit economy.
“Stocks are gaining support from the stronger stock market in the United States and expectations of a recovery in the US economy this year,” said Makoto Sengoku, a market analyst at Tokai Tokyo Securities.
In late morning trade, European markets extended their New Year rally with modest gains. London rose 0,32%, Frankfurt gained 0,47% and Paris edged up 0,02%.
“Despite those bumper gains on Wall Street at the end of last week and a solid start to New Year’s trade in Japan, European equities are looking at a rather modest start to the week,” said CMC Markets dealer Jimmy Yates.
Tokyo’s Nikkei-225 index closed 2,07% higher in a half day of trading, its first of 2009, ending above the 9 000-point level for the first time since November 10.
A weaker yen gave a boost to Japanese exporters, which have been hit hard by the recent strength of the Japanese currency, he said.
Dealers said they were also encouraged to buy shares as fears of a collapse of the US carmaker industry receded after the US government approved a financial rescue package in December.
But “there still remain concerns over corporate profits and the overall economy both in the United States and in Japan”, said Ryuta Otsuka, a strategist at Toyo Securities.
“In the longer term, stock prices may remain fragile,” Otsuka said.
Stocks jumped 3,5% in Hong Kong and gained 3,29% in Shanghai. Taipei ended 2,3% higher but Sydney slipped 0,7%.
Stock markets in the US, Europe and much of Asia had risen sharply on Friday on hopes for a brighter year ahead after a horrendous 2008 that saw Wall Street’s Dow Jones index plunge 33,84%, the worst loss since 1931.
“Equity indexes should end 2009 substantially higher across the globe,” predicted Dariusz Kowalczyk, chief investment strategist at CFC Seymour.
“However, in the short term, volatility is likely to persist, and the recent surge in optimism is likely to be tested severely in the first quarter by very negative macroeconomic data,” he added.
The Dow Jones Industrial Average rallied 2,94% on Friday.
Obama, who takes office on January 20, has already pledged to step up efforts to revive the moribund economy.
Some analysts questioned how long the new year rally would last.
“Looking ahead, there are few clear market-moving factors which would further push up share prices, in terms of both economic indicators and corporate earnings,” said Otsuka. — AFP